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Lecture 8

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Carleton University
BUSI 2701

Lecture 8 – IB strategy What Is Strategy - A firms strategy refers to the actions that managers take ot attain the goals of the firm - Firms need ot pursue strats to increase profit or other recognized measures of performance o Profitability – ror on inv cap o Profit How to Increase Profitability - Add value to product - Lower costs of production - Sell more in existing market - Sell more by expanding internationally How to Create Value? - Value creation is difference between o Rev received which is the value of the product or service to the consumer o Costs of producing the product or service Generic Strategies 1. Differentiation – c goose 2. Low cost 3. Combo of both Why is Strategic Positioning Important? - Defines firms - Pick viable option - Configure ext and int ops w production decisions - Have the right organization structure (HR decisions) in place to execute strategy Firms Operations - Production - Marketing - Materials gmmt - Supplier mgmt. - Finance accounting and legal - R and d - Hr - Info sys - Primary activities – R&D, production, marketing and slaes, customer service - Support activities – info sys, logistics, HR Value Chain: where value is added along production - Raw materials - Transpo - Storage - R&D - Design - Manufacturing - Cap assets - Marketing - Distribution - Cost of financing Expanding Internationally - Location economics - Greater cost economies from experience effects - Earn a greater return o Leveraging competencies from host to home and vice versa - Labour productivity o Increases with workers who figure out how to produce better and faster o Managers learn how to manage ops better - Economies of scale – large vol reduction in unit cost
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